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Income Taxes | 12 Months Ended
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Aug. 31, 2022
Income Tax Disclosure [Abstract] |
Income Taxes | Income Taxes Provision for Income Taxes Income (loss) before income tax expense is summarized below (in millions):
| Fiscal Year Ended August 31,
| 2022 |  | 2021 |  | 2020
Domestic(1) | $ | (116) |  |  | $ | (271) |  |  | $ | (452) |
Foreign(1) | 1,347 |  |  | 1,215 |  |  | 713 |
Total | $ | 1,231 |  |  | $ | 944 |  |  | $ | 261 |
(1)Includes the elimination of intercompany foreign dividends paid to the U.S. Income tax expense (benefit) is summarized below (in millions):
| Fiscal Year Ended August 31,
| 2022 |  | 2021 |  | 2020
Current: |  |  |  |  |
Domestic - federal | $ | 7 |  |  | $ | 7 |  |  | $ | (3) |
Domestic - state | 2 |  |  | 3 |  |  | 1 |
Foreign | 239 |  |  | 252 |  |  | 180 |
Total current | 248 |  |  | 262 |  |  | 178 |
Deferred: |  |  |  |  |
Domestic - federal | (25) |  |  | 2 |  |  | (10) |
Foreign | 12 |  |  | (18) |  |  | 36 |
Total deferred | (13) |  |  | (16) |  |  | 26 |
Total income tax expense | $ | 235 |  |  | $ | 246 |  |  | $ | 204 |
Reconciliation of the U.S. federal statutory income tax rate to the Company’s effective income tax rate is summarized below:
| Fiscal Year Ended August 31,
| 2022 |  | 2021 |  | 2020
U.S. federal statutory income tax rate | 21.0 | % |  | 21.0 | % |  | 21.0 | %
State income taxes, net of federal tax benefit | 0.7 |  |  | 0.2 |  |  | (2.6) |
Impact of foreign tax rates(1)(2) | (4.0) |  |  | (4.6) |  |  | (0.9) |
Permanent differences | 1.2 |  |  | (0.4) |  |  | 3.2 |
Income tax credits(1) | (0.5) |  |  | (0.4) |  |  | (2.5) |
Changes in tax rates on deferred tax assets and liabilities(3) | — |  |  | — |  |  | 10.3 |
Valuation allowance(4) | (3.3) |  |  | 1.3 |  |  | 16.8 |
Equity compensation | (0.5) |  |  | 0.6 |  |  | 2.2 |
Impact of intercompany charges and dividends | 3.6 |  |  | 4.4 |  |  | 15.0 |
Global Intangible Low-Taxed Income | 1.1 |  |  | 3.0 |  |  | 13.7 |
Other, net | (0.2) |  |  | 0.9 |  |  | 2.0 |
Effective income tax rate | 19.1 | % |  | 26.0 | % |  | 78.2 | %
(1)The Company has been granted tax incentives for various subsidiaries in China, Malaysia, Singapore and Vietnam, which primarily expire at various dates through fiscal year 2031 and are subject to certain conditions with which the Company expects to comply. These tax incentives resulted in a tax benefit of approximately $80 million ($0.57 per basic weighted average shares outstanding), $51 million ($0.34 per basic weighted average shares outstanding) and $43 million ($0.28 per basic weighted average shares outstanding) during the fiscal years ended August 31, 2022, 2021 and 2020, respectively. (2)For the fiscal years ended August 31, 2022 and August 31, 2021, the impact of foreign tax rates was primarily related to increased income in low tax rate jurisdictions. (3)For the fiscal year ended August 31, 2020, the changes in tax rates on deferred tax assets and liabilities was primarily due to the re-measurement of deferred tax assets related to an extension of a non-U.S. tax incentive of $21 million. (4)For the fiscal year ended August 31, 2022, the valuation allowance change was primarily due to an income tax benefit of $26 million for the reversal of a portion of the U.S. valuation allowance and decreased deferred tax assets with corresponding valuation allowances due to the liquidation of certain non-U.S. subsidiaries. The valuation allowance change for the fiscal years ended August 31, 2021 and 2020 was primarily due to the change in deferred tax assets for sites with existing valuation allowances. Deferred Tax Assets and Liabilities Significant components of the deferred tax assets and liabilities are summarized below (in millions):
| August 31, 2022 |  | August 31, 2021
Deferred tax assets: |  |  |
Net operating loss carryforwards | $ | 176 |  |  | $ | 200 |
Receivables | 4 |  |  | 8 |
Inventories | 16 |  |  | 14 |
Compensated absences | 13 |  |  | 13 |
Accrued expenses | 106 |  |  | 115 |
Property, plant and equipment | 66 |  |  | 71 |
Domestic tax credits | 11 |  |  | 11 |
Foreign jurisdiction tax credits | 4 |  |  | 10 |
Equity compensation | 10 |  |  | 10 |
Domestic interest carryforwards | 4 |  |  | 4 |
Cash flow hedges | — |  |  | 10 |
Capital loss carryforwards | 20 |  |  | 20 |
Revenue recognition | 32 |  |  | 36 |
Operating and finance lease liabilities | 72 |  |  | 60 |
Other | 27 |  |  | 19 |
Total deferred tax assets before valuation allowances | 561 |  |  | 601 |
Less valuation allowances | (281) |  |  | (353) |
Net deferred tax assets | $ | 280 |  |  | $ | 248 |
Deferred tax liabilities: |  |  |
Unremitted earnings of foreign subsidiaries | $ | 57 |  |  | $ | 60 |
Intangible assets | 25 |  |  | 27 |
Operating lease assets | 111 |  |  | 92 |
Other | 10 |  |  | 4 |
Total deferred tax liabilities | $ | 203 |  |  | $ | 183 |
Net deferred tax assets | $ | 77 |  |  | $ | 65 |
Based on the Company’s historical operating income, projection of future taxable income, scheduled reversal of taxable temporary differences, and tax planning strategies, management believes it is more likely than not that the Company will realize the benefit of its deferred tax assets, net of valuation allowances recorded. The net decrease in valuation allowances for the fiscal year ended August 31, 2022 is primarily due to the reversal of a portion of the U.S. valuation allowance and the change in deferred tax assets for sites with existing valuation allowances. The Company’s assessment that led to the partial release of the U.S. valuation allowance considered all available positive and negative evidence including, among other evidence, the impact of historical operating results and the impact of projected future taxable income upon application of the incremental cash tax savings approach for GILTI. As of August 31, 2022, the Company intends to indefinitely reinvest the remaining earnings from its foreign subsidiaries for which a deferred tax liability has not already been recorded. The accumulated earnings are the most significant component of the basis difference which is indefinitely reinvested. As of August 31, 2022, the indefinitely reinvested earnings in foreign subsidiaries upon which taxes had not been provided were approximately $2.9 billion. The estimated amount of the unrecognized deferred tax liability on these reinvested earnings was approximately $0.2 billion. Tax Carryforwards The amount and expiration dates of income tax net operating loss carryforwards, tax credit carryforwards, and tax capital loss carryforwards, which are available to reduce future taxes, if any, as of August 31, 2022 are as follows (in millions):
| Last Fiscal Year of Expiration |  | Amount
Income tax net operating loss carryforwards:(1) |  |  |
Domestic - federal | 2038 or indefinite |  | $ | 13 |
Domestic - state | 2042 or indefinite |  | $ | 54 |
Foreign | 2037 or indefinite |  | $ | 567 |
Tax credit carryforwards:(1) |  |  |
Domestic - federal | 2032 |  | $ | 7 |
Domestic - state | 2027 or indefinite |  | $ | 4 |
Foreign(2) | Indefinite |  | $ | 4 |
Tax capital loss carryforwards:(3) |  |  |
Domestic - federal | 2026 |  | $ | 76 |
(1)Net of unrecognized tax benefits. (2)Calculated based on the deferral method and includes foreign investment tax credits. (3)The tax capital loss carryforwards were primarily from an impairment of an investment that was deemed worthless for tax purposes. Unrecognized Tax Benefits Reconciliation of the unrecognized tax benefits is summarized below (in millions):
| Fiscal Year Ended August 31,
| 2022 |  | 2021 |  | 2020
Beginning balance | $ | 241 |  |  | $ | 190 |  |  | $ | 164 |
Additions for tax positions of prior years | 22 |  |  | 15 |  |  | 10 |
Reductions for tax positions of prior years | (21) |  |  | (3) |  |  | (9) |
Additions for tax positions related to current year(1) | 36 |  |  | 36 |  |  | 27 |
Cash settlements | (3) |  |  | — |  |  | (1) |
Reductions from lapses in statutes of limitations | (3) |  |  | (2) |  |  | (1) |
Reductions from non-cash settlements with taxing authorities | (9) |  |  | — |  |  | (2) |
Foreign exchange rate adjustment | (10) |  |  | 5 |  |  | 2 |
Ending balance | $ | 253 |  |  | $ | 241 |  |  | $ | 190 |
Unrecognized tax benefits that would affect the effective tax rate (if recognized) | $ | 150 |  |  | $ | 139 |  |  | $ | 109 |
(1)The additions for the fiscal years ended August 31, 2022, 2021 and 2020 are primarily related to taxation of certain intercompany transactions. The Company recognizes interest and penalties related to unrecognized tax benefits in income tax expense. The Company’s accrued interest and penalties were approximately $30 million as of August 31, 2022 and 2021. The Company recognized interest and penalties of approximately $0 million, $7 million and $4 million during the fiscal years ended August 31, 2022, 2021 and 2020, respectively. It is reasonably possible that the August 31, 2022 unrecognized tax benefits could decrease during the next 12 months by $18 million, primarily related to taxing authority agreements associated with intercompany transactions. The Company is no longer subject to U.S. federal tax examinations for fiscal years before August 31, 2018. In major non-U.S. and state jurisdictions, the Company is no longer subject to income tax examinations for fiscal years before August 31, 2012 and August 31, 2009, respectively.

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- Definition The entire disclosure for income taxes. Disclosures may include net deferred tax liability or asset recognized in an enterprise's statement of financial position, net change during the year in the total valuation allowance, approximate tax effect of each type of temporary difference and carryforward that gives rise to a significant portion of deferred tax liabilities and deferred tax assets, utilization of a tax carryback, and tax uncertainties information. + References Reference 1: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 21 -URI https://asc.fasb.org/extlink&oid=121826272&loc=d3e32857-109319 Reference 2: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section S99 -Paragraph 2 -Subparagraph (SAB Topic 11.C) -URI https://asc.fasb.org/extlink&oid=122134291&loc=d3e330215-122817 Reference 3: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 17 -Subparagraph (b) -URI https://asc.fasb.org/extlink&oid=121826272&loc=d3e32809-109319 Reference 4: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section S99 -Paragraph 1 -Subparagraph (SAB TOPIC 6.I.5.Q1) -URI https://asc.fasb.org/extlink&oid=122134291&loc=d3e330036-122817 Reference 5: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 14 -URI https://asc.fasb.org/extlink&oid=121826272&loc=d3e32705-109319 Reference 6: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 270 -Section 50 -Paragraph 1 -URI https://asc.fasb.org/extlink&oid=6424409&loc=d3e44925-109338 Reference 7: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -URI https://asc.fasb.org/topic&trid=2144680 Reference 8: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 30 -Section 50 -Paragraph 2 -Subparagraph (a) -URI https://asc.fasb.org/extlink&oid=6424122&loc=d3e41874-109331 Reference 9: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 235 -SubTopic 10 -Section S99 -Paragraph 1 -Subparagraph (SX 210.4-08(h)(2)) -URI https://asc.fasb.org/extlink&oid=120395691&loc=d3e23780-122690 + Details
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